We’ve been watching the cost of wood break new records, in part because we put our roofs on top of plywood decks. Here are some interesting things we’ve been reading about this problem and what caused it.
According to Fortune magazine:
On Friday, the price of lumber per thousand board feet jumped to $1,048, according to Random Lengths. That’s an all-time high, and up 193% from a year ago.
It continues with:
Don’t expect demand to drop anytime soon.
“The pipeline for lumber and other wood products demand remains quite deep in 2021…Builders have plenty of ongoing projects to keep working through, which is keeping lumber and panel demand high, and making it very difficult for mills to ramp production up fast enough to rebalance the market,” says Dustin Jalbert, senior economist at Fastmarkets RISI, where he specializes in wood prices.
Photo from “Think Wood”.
The Hustle’s daily email, they provide the following insight:
Wood is typically used for building roofs.
Lumber prices are up nearly 260% since April 2020, following a perfect storm of surging demand and diminished supply.
And it all started with a simple backlog…
At the start of the pandemic, sawmills anticipated weak demand and limited production by up to 30%. To their surprise, demand turned out stronger than ever:
DIY boom: While the US economy shrank 3.5% in 2020, spending on home improvements and repairs grew 3%+
Low interest rates: In December, US new housing starts hit a 14-year high
Despite wood production hitting a 13-year high in February, supply hasn’t caught up with demand — and now ~70% of builders are raising home prices to slow demand down.
The result is a $24k+ increase in the average price of single-family homes since April 2020.
European beetles are now coming in clutch
Not those European beetles. A literal beetle infestation across Europe is boosting logging there, and Europe’s share of US lumber imports reached a record high of 13% in 2020.
Those imports are critical to the US lumber supply as British Columbia has reduced production by over a third in 5 years.
In conclusion… (We wanted to end this piece with a joke about lumber, but we just couldn’t think of any that wood work.)